Coffs Harbour Deep Sea Fishing Club Ltd (Administrators Appointed) ACN 002 933 922 ("the Company")
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Coffs Harbour Deep Sea Fishing Club Ltd
(Administrators Appointed)
ACN 002 933 922 ("the Company")
Administrators' Section 439A Report
18 May 2015
Key Contacts:
Andrew Sallway
Joint and Several Administrator
T +61 2 8297 2532
E andrew.sallway@au.gt.com
Andre Lakomy
Senior Manager
T +61 2 8297 2540
E andre.lakomy@au.gt.com
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015
Contents Section Page Appendices 1. Executive summary 4 A. DIRRI 2. Introduction 7 B. Administrators' Remuneration Report 3. Company's History and Reasons for Failure 12 C. Notice of second meeting of creditors 4. Actions undertaken to date 23 D. Proof of Debt form 5. Offences, voidable transactions and insolvent trading 27 E. Proxy form 6. Estimated return to creditors 37 7. Employees and Employee Entitlements 41 8. Administrator's recommendation 44 9. Remuneration 46 10. Meeting 48 © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 2
Glossary
The Act Corporations Act 2001 ERV Estimated Realisable Value
Administrators Andrew Sallway and Said Jahani of Grant Thornton Australia FEG Fair Entitlements Guarantee Scheme
Ltd, Voluntary Administrators of the Company
FY12/13/14 Financial Year ending 30 June 2012, 30 June 2013 and 30 June
ALL PAAP All Present and after-acquired property 2014
ARITA Australian Restructuring Insolvency and Turnaround GST Goods and Services Tax
Association
ILGA Independent Liquor and Gaming Authority
ASIC Australian Securities and Investments Commission
k Thousands
ATO Australian Taxation Office
m Millions
BAS Business Activity Statements
MYOB Mind Your Own Business Accounting Program
BCU Banana Credit Union
NAB National Australia Bank Limited
c. Circa
OLGR Office of Liquor, Gaming & Racing
The Company or Coffs Harbour Deep Sea Fishing Club Limited (Administrators
p.a. Per Annum
The Club Appointed)
PPSR Personal Property Securities Register
Crown NSW Crown Lands Division
RATA Report as to Affairs
Directors William Mabey, Geoffrey Parker, Lee Beckett, Paige Sinclair, S439A Report A report on the company's business, property, affairs and
Richard Wilson, Garry Thomas financial circumstances required to be given to creditors
DIRRI Declaration of Independence, Relevant Relationships and pursuant to Section 439A(4) of the Act
Indemnities Statutory Priorities The priority for the payment of unsecured creditor claims set
DOCA Deed of Company Arrangement down in Section 553, 560 and 561 of the Act
YTD Year to Date, being the period 1 July 2014 to 21 April 2015
EOI Expression of Interest
EOS Estimated Outcome Statement
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 3Section 1 Executive summary 01. Executive summary 02. Introduction 03. Company's History and Reasons for Failure 04. Actions undertaken to date 05. Offences, voidable transactions and insolvent trading 06. Estimated return to creditors 07. Employees and Employee Entitlements 08. Administrator's recommendation 09. Remuneration 10. Meeting © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015
Executive summary
Executive summary
Introduction Andrew Sallway and Said Jahani were appointed Joint and Several Administrators of the Company on 21 April 2015.
The first meeting of creditors was held on Friday, 1 May 2015.
Refer to Section 2
At the first meeting of creditors, creditors confirmed the Administrators' appointment and elected not to appoint a Committee of
Creditors.
Background Information The Company operates a licensed club which was established in 1964 by a group of fishing anglers and currently has 3,532 members.
It is situated on Jordan Esplanade in one of Coffs Harbour's most iconic and scenic locations.
Refer to Section 3
The Club is well equipped with restaurant and dining facilities, large bar and gaming section which includes 36 active poker machines.
The Club also offers function and catering services, boat washing bay and fish catch cleaning amenities, with ample parking on site.
Actions Since Appointment The Administrators traded the Company from 22 April 2015 to 26 April 2015.
After careful consideration the Administrators decided to cease trading the business on 27 April 2015 to ensure further losses were not
Refer to Section 4
incurred.
All wages for the period of trading by the Administrator have been paid. Wages due on appointment were paid following a funding
contribution provided by the NAB.
The Administrators have been reviewing options to restructure the Company including an amalgamation with another club, a DOCA
from the members of the Club and/or sale of assets in order to maximise the return to creditors.
Offences, voidable Voidable transactions
− Based on our investigations, we have identified some unfair preference payments to third party creditors. However we do not
transactions and insolvent anticipate that this will result in a material return to creditors.
trading Insolvent trading
Refer to Section 5 − Based on our review of the books and records and analysis of the financial position of the Company, it is the Administrators' view
that the Company was insolvent from at least December 2014.
Estimated Return to No DOCA proposal has been received and as such we are unable to comment on any potential return under a DOCA scenario.
In the case the Company is placed into liquidation, we anticipate a shortfall to the secured creditor and it is not anticipated that there
Creditors will be a return to unsecured creditors.
Refer to Section 6
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 5Executive summary
Executive Summary (cont'd)
Employee Entitlements On appointment 21 people were employed by the Company (comprising 11 full time, 1 part time and 9 casuals).
Based on information provided by the Company we estimate pre-appointment employee entitlements could be c.$614,000 – this
Refer to Section 7
includes a potential claim by the former manager of c.$400,000.
In the case the Company is placed into liquidation, employees will be referred to FEG (the Government funded safety net for
employees) as there will be insufficient funds to pay employee claims.
Administrators' Section 439A(4)(b) of the Act requires the Administrators of the Company to prepare a statement setting out their opinion on the future
options for the Company.
recommendation In this report, we have recommended that creditors resolve to wind the Company up for the following reasons:
Refer to Section 8 − A winding up would allow time for more detailed investigations into the Company's affairs and the conduct of the Directors;
− At this stage, we have not received a DOCA proposal. Accordingly, we are unable to recommend a DOCA at this stage; and
− The Company is insolvent, therefore ending the Administration is not a viable option for creditors.
We note that a number of the Clubs members are considering submitting a DOCA proposal prior to the second meeting of creditors on
26 May 2015. If this occurs, it maybe appropriate for creditors to adjourn the meeting for up to 45 business days to allow the
Administrators to assess the proposal and provide a recommendation to creditors.
Remuneration The Administrators will be seeking approval from creditors for their remuneration at the forthcoming meeting of creditors.
A Remuneration Report is enclosed at Appendix B, providing details of work performed to date, estimated future remuneration up to
Refer to Section 9
the second meeting of creditors and estimated remuneration of the liquidators, depending on the creditors' decision at the second
meeting.
Meeting The second meeting of creditors will be held at 11:00AM on Tuesday, 26 May 2015 at the Coffs Harbour Deep Sea Fishing Club,
Jordan Esplanade, Coffs Harbour NSW 2540. Registration will open 30 minutes prior to the meeting
Refer to Section 10
The notice in regards to this meeting is enclosed at Appendix C.
A Proof of Debt and Proxy Form are enclosed at Appendices D and E and are to be returned to our office by 4:00PM Monday, 25 May
2015.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 6Section 2 Introduction 01. Executive summary 02. Introduction 03. Company's History and Reasons for Failure 04. Actions undertaken to date 05. Offences, voidable transactions and insolvent trading 06. Estimated return to creditors 07. Employees and Employee Entitlements 08. Administrator's recommendation 09. Remuneration 10. Meeting © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015
Introduction
Appointment and Meetings of Creditors
Appointment of Administrators At the meeting, creditors will be required to determine the future of the
Andrew Sallway and Said Jahani were appointed Joint and Several Administrators Company and to resolve one of the following resolutions for the Company:
of the Company under Part 5.3A of the Act on 21 April 2015 by the Company's − That the Administration end;
Board of Directors. The appointment was approved by the Independent Liquor
− That the Company executes a DOCA;
and Gaming Authority ("ILGA") on 21 April 2015.
− That the Company be wound up; or
The purpose of the appointment of an administrator is to allow for an
independent insolvency practitioner to take control of and investigate the affairs − That the meeting be adjourned for up to 45 business days.
of an insolvent company. During that time creditors' claims are put on hold. At At this stage a DOCA proposal has not been received and, as the Company is
the end of that period we are required to provide creditors with information and insolvent, it is not appropriate that the Administration end.
recommendations to assist creditors to decide upon the company's future. The Administrators understand that the members are considering submitting a
DOCA proposal, which may include amongst other things, a proposal to provide
First Meeting of Creditors a return to creditors and re-establish the Club. On the basis that this proposal is
The first meeting of the Company's creditors was held on Friday, 1 May 2015 at received prior to the meeting on 26 May 2015, it may be appropriate for creditors
the Company's premises. to resolve to adjourn the meeting for up to 45 business days to allow the
Administrators to consider the DOCA proposal and provide a recommendation
At this meeting, creditors confirmed the appointment of Andrew Sallway and
to creditors.
Said Jahani and elected not to form a Committee of Creditors.
In the event that creditors elect not to adjourn the meeting or a DOCA
A copy of the minutes of the first meeting of creditors is available on the ASIC
proposal is not received, the Administrators recommend that creditors
and Grant Thornton websites.
resolve to wind-up the Company.
Second Meeting of Creditors
The second meeting of creditors will be held at 11:00AM on Tuesday, 26 May
2015 at the Coffs Harbour Deep Sea Fishing Club, located at Jordan Esplanade,
Coffs Harbour NSW 2450. The notice of meeting is attached as Appendix C.
The purpose of the second meeting is to consider the Administrators' report on
the Company's business, property, affairs and financial circumstances and to
consider the Administrators’ statement of opinion in respect of each of the
options available to creditors.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 8Introduction
Report to creditors
The purpose of this report is to provide creditors with sufficient information for − Discussions with the ILGA, OLGR, Coffs Harbour City Council, NAB,
them to make an informed decision about the future of the Company, including: ClubsNSW and members of the Club;
− Background information about the Company; − Creditors of the Company;
− Reasons for the Company's failure; − Advice obtained from our legal advisors;
− The results of our investigations; − Information available from public sources, such as ASIC and the PPSR; and
− The estimated return to creditors; and − A review of the Company's books and records provided to date.
− The options available to creditors and our opinion on each of these options. We have not performed an audit and we reserve the right to alter our
In the time available to us, we have undertaken preliminary investigations to conclusions, should the underlying data prove to be inaccurate or change
prepare this report and formulate our opinion. materially from the date of this report.
At the meeting of creditors to be held on 26 May 2015, creditors will be asked to In the event that the Company proceeds to liquidation, this report will form the
make a decision by passing a resolution in respect of options available to them. basis of our further investigations. Provided that funding is available, the
In this report we have recommended to creditors that the Company be investigations will be more extensive than those undertaken to date, particularly
placed into liquidation and detailed why this option, in our opinion, is in due to the time constraints of the administration process.
creditors' best interest. Further investigations may be supported by public examinations of the Directors,
Creditors also have the option to adjourn the meeting for up to 45 business days. and others who may be able to provide information about the Company's
We understand that a group of the Company's members are considering examinable affairs as that expression is defined in the Act.
submitting a DOCA proposal prior to the second meeting and if this occurs prior It is the Administrators' view that this report provides sufficient information to
to the second meeting of creditors, it may be appropriate to adjourn the meeting creditors to allow them to make an informed decision as to the Company's future
to allow the Administrators time to assess the proposal and provide a and allows the Administrators to make a reasoned and fair recommendation
recommendation to creditors. based upon their opinions and the options available to creditors.
The Administrators have relied on information provided from numerous sources
to prepare the report, including:
− Discussions with the Directors of the Company to understand the business'
underlying activity, financial position and reasons for failure;
− Discussions with the Company's accountant;
− Discussions with employees and contractors;
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 9Introduction
Compliance and Independence
Compliance with best practice − This report is not for general circulation, publication, reproduction or any use
We confirm that this report complies with the statements of best practice issued other than to assist creditors in evaluating their position as creditors and must
by the Australian Restructuring, Insolvency and Turnaround Association not be disclosed without the prior approval of the Administrators.
("ARITA"), with regard to content of the Administrators' report and the Code of − The Administrators do not assume or accept any responsibility for any liability
Professional Practice with regard to remuneration. or loss sustained by any creditor or any other party as a result of the
circulation, publication, reproduction or any use beyond that permitted above.
Independence − The statements and opinions given in this report are given in good faith and
As disclosed in our First Notice to Creditors dated 23 April 2015, the in the belief that such statements are not false or misleading. Except where
Administrators undertook a proper assessment of the risks in relation to their otherwise stated, we reserve the right to alter any conclusions reached on the
independence prior to accepting the appointment. Our assessment identified no basis of any changed or additional information which may be provided to us
real or potential risk to our independence. between the date of this report and the date of the second meeting.
An updated DIRRI has been prepared to bring to creditors attention an − Neither the Administrators, nor any member or employee thereof are
indemnity provided by the secured creditor of $40,000 ($25,000 in time costs and responsible in any way whatsoever to any person in respect of any errors in
$15,000 in disbursements) in connection with activities around the sale of non- this report arising from incorrect information.
circulating assets. A copy of the updated DIRRI is attached as Appendix A. − Creditors should seek their own independent legal advice as to their rights and
the options available to them at the second meeting of creditors.
Disclaimer
In reviewing this report, creditors should note the following:
− This report is based on information from the books, records and other
information provided by the Directors. Whilst the Administrators have
reviewed the information, there has been no independent verification of the
information.
− In considering the options available to creditors and formulating their
recommendations, the Administrators have necessarily made forecasts of asset
realisation and total creditors. These forecasts and estimates may change.
Whilst the forecasts and estimates are the result of the Administrators' best
assessments in the circumstances, creditors should note that the outcome for
creditors may differ from the information provided in this report.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 10Introduction
Key events in the Administration
The timeline below details the key milestones during the administration.
Since the date of appointment, we have undertaken an urgent assessment of the possible options to maximise the return to creditors (including an amalgamation), and
conducted investigations into the reasons for the Company's failure.
The Administrators have undertaken the following key actions:
• Preparation of the s.439A report;
• Held discussions with various parties with respect to asset realisations
and the DOCA process;
• Undertaken a preliminary review of creditor and employee claims; and
• Undertaken investigations into the Company's affairs.
21 April 2015 27 April 2015 1 May 2015 5 May 2015 12 May 2015 18 May 2015 26 May 2015
Date of Advertised on the Date non- Second meeting of creditors when creditors
Administrators The Administrators will decide on the outcome of the Company,
appointment of First creditors' ClubsNSW website to binding
ceased operations issued their s439A which will determine whether:
Voluntary meeting held identify potential expressions of
at the Club report to creditors. 1. The Administration ends; or
Administrators. amalgamation partners. interest due.
2. The company executes a DOCA;
3. The company is wound up; or
4. Adjourn for up to 45 business days.
Preliminary investigations undertaken by the Administrators in relation to voidable
transactions and potential insolvent trading.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 11Section 3 Company's History and Reasons for Failure 01. Executive summary 02. Introduction 03. Company's History and Reasons for Failure 04. Actions undertaken to date 05. Offences, voidable transactions and insolvent trading 06. Estimated return to creditors 07. Employees and Employee Entitlements 08. Administrator's recommendation 09. Remuneration 10. Meeting © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015
Company's History and Reasons for Failure
Principal Activities and Officeholders
Principal Activities Current Officeholders
The Company operates a licensed club which was established in 1964 by a group Date appointed
of fishing anglers and currently has 3,532 members.
William Ross Mabey (Director and President) 1 November 2007
It is situated on Jordan Esplanade in one of Coffs Harbour's most iconic and
scenic locations. Geoffrey Stuart Parker (Director) 27 September 1998
The Club is well equipped with restaurant and dining facilities, large bar and Lee Raymond Beckett (Director) 24 October 2011
gaming section which includes 36 active poker machines. The Club also offers
Paige Sinclair (Director and Treasurer) 23 March 2014
function and catering services, boat washing bay and fish catch cleaning
amenities, with ample parking on site. Richard Wilson (Director) 23 March 2014
In 2008, major renovations to the Club's facilities were undertaken including Garry Thomas (Director) 27 January 2015
extension of the restaurant, new kitchen, construction of new offices, and
Linda Jeanette Jones (Director) 25 October 2009
renovations of the large BBQ area.
The Company holds a current lease with the Coffs Coast State Park Trust which Malcolm Clive Devine (Secretary) 30 August 2001
expires on 30 June 2021.
The Company's officeholders are detailed above, as identified from a search of
The following fishing sections operate under the banner of the Coffs Harbour the ASIC database.
Deep Sea Fishing Club:
At this point, we have not identified any other person who may be considered or
− Deep Sea Fishing Club; deemed to be a shadow director of the Company.
− Game Fishing Club; and According to the ASIC database, there were three changes to the officeholders in
− Beach Rock & Estuary Fishing Club. the 12 months prior to the appointment date;
− Brett Andrew Williams (ceased directorship on 27 January 2015);
− Victor Rullis (ceased directorship on 27 January 2015); and
− Frederick Maxwell Glenn (ceased directorship on 28 October 2014).
It is also our understanding Linda Jeanette Jones resigned as a director of the
Company on 14 April 2015, however the ASIC database has not been updated.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 13Company's History and Reasons for Failure
Secured Parties
Overview Purchase Money Security Interests / Retention of Title claims
A review of the Personal Property and Securities Register ("PPSR") identified The Administrators contacted all registered parties on 24 April 2015. The
numerous registered security interests, which are summarised in the table below. majority of these claims relate to perishable stock and beverages subject to the
respective suppliers security interest as per their registration on the PPSR. Where
Chargee Charge Date possible such stock has been returned to suppliers.
National Australia Bank All PAAP (6), Motor 30 January 2012, 13 July The remainder of these claims are being reviewed.
Limited Vehicle (1), Other Goods 2012, 4 December 2013, 24
(1) January 2014
Secured creditor
Foster's Australia Limited Other Goods (1) 30 January 2012
The Secured Creditor holds a registered circulating and non-circulating charge
Treasury Wine Estates Other Goods (1) 2 February 2012 over the Company's assets which was registered on the PPSR. The value of their
Australia Limited debt is $2,665,466 as at 4 May 2015.
Various Corporate Entities All PAAP (1), Other Goods 21 May 2013, 8 November As at the date of appointment there were total credit funds of $57,110 in the
(2) 2013 Company's bank accounts made up of various debit and credit balances.
The secured creditor has applied a right of set-off to a term deposit of $40,000
"Various Corporate Entities" comprise Australian Liquor Marketers (WA) Pty
and is reviewing its right of set-off in relation to other bank accounts held.
Ltd, Australian Liquor Marketers Pty Limited, Australian Liquor Marketers
(QLD) Pty Ltd, IGA Distribution (SA) Pty Limited, Scanning Systems (Aust.) Pty We have been liaising extensively with the Secured Creditor in relation to the sale
Ltd., Metcash Food & Grocery Pty Ltd, M-C International Australia Pty limited, and/or amalgamation of the Club and its assets, and their rights under the
Metcash Food & Grocery Convenience Division Pty Limited, Metcash trading circulating and non-circulating charges.
Limited, IGA Distribution (VIC) Pty Limited, IGA Distribution (WA) Pty On appointment of Administrators, c. $18,000 pre-appointment wages (including
Limited. on-costs) were owing to employees. As the Company had insufficient cash
available to meet pre-appointment wages, the secured creditor provided
Leased Assets additional funds to allow the Administrators to process payment of theses wages.
The Company leased a Fuji Xerox printer. Pursuant to Section 443B of the Act,
the Administrators elected not to exercise their rights in relation to such property
and notified the financier to collect their asset.
The Company also leased a motor vehicle from the NAB. The lease has
terminated and the Administrators are in the process of selling the motor vehicle.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 14Company's History and Reasons for Failure
Books and Records and Related Entities
Books and records ― Brett Andrew Williams (former director) has lodged a claim totalling $3,800
Pursuant to Section 286 of the Act, a company must keep written financial relating to a loan provided to the Company.
records that correctly record and explain its transactions, financial position and ― Fredrick Maxwell Glenn (former director) has lodged a claim totalling
performance and enable true and fair financial statements to be prepared and $17,095. This relates to a loan of $10,000, repairs to the Club of $1,289, and
audited. Financial records must be kept for seven (7) years after the transactions services rendered by BluFi Digital media of $5,806.
covered by the records are completed.
― Linda Jeanette Jones (former director) has lodged a claim totalling $10,000
Failure to maintain books and records may give rise to a presumption of relating to a loan provided to the Company.
insolvency pursuant to Section 588E of the Act. This presumption may be relied
― Reginald Latter (former director ) has lodged a claim totalling $10,000 relating
upon by a Liquidator in an application for compensation for insolvent trading
to a loan provided to the Company to assist with payment to creditors.
and other actions for recoveries pursuant to Part 5.7B of the Act.
• All related party transactions have been investigated by the Administrators. Please
During the limited time available to the Administrators to undertake
refer to Section 5 of this report for further information.
investigations, the Company's financial records have not been adequately
maintained and that there was inadequate:
− Internal financial reporting; and
− Controls over accounts payable.
If the Company is placed into liquidation we will further investigate whether the
Company maintained sufficient books and records as required under the Act.
Related entities
The following creditors are related parties of the Company:
― Lee Beckett (Director) has lodged a claim against the Company for $5,000
which relates to a loan to help secure overdraft facilities with the NAB. Lee
Beckett is also the current regional manager of Handybin Waste Services
(Coffs Harbour) Pty Ltd which has lodged a claim against the Company
totalling $6,217 relating to waste disposal services.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 15Company's History and Reasons for Failure
Reasons for failure
Directors reasons for failure − Trading Losses
A questionnaire was sent to all current officers of the Company following the − The audited accounts reveal the Company recorded losses after tax of c.
appointment of the Administrators. $538,000 in FY12, c. $585,000 in FY13 and c. $220,000 in FY14.
All Directors returned the completed questionnaire by 11 May 2015, and all − During the period from 1 July 2014 to 21 April 2015 the Company
Directors submitted the RATA (discussed further in this section on page 20) by recorded a loss of c. $174,000. In October 2014, the Club received a
15 May 2015. $245,000 insurance pay-out concerning water damage to the Club's roof.
The Directors have listed the following reasons for the failure of the Company: Excluding this one-off insurance receipt, the Company's YTD15 loss to 21
April 2015 was c. $419,000.
– Poor day to day management of the Company over the past five to six years,
leading to consecutive trading losses over the past four financial years − Decreasing Net Asset Position
(totalling c. $2 million), and no changes to the day to day management of the − The Company's financial position has deteriorated significantly from 30
Company to mitigate these losses; June 2012 (c.$765,000 decrease in net assets to 21 April 2015). This is
– The Company's lack of reserves for employee entitlements including the primarily due to depreciation of property plant and equipment, sale of nine
significant amount of leave accrued by the former Manager; Poker Machine Entitlements and increase in trade and other payables. The
sale of Poker Machine Entitlements for $90,000 (excl. GST), incurred a
– Inability to meet budgeted projections;
loss of c. $60,000.
– Lack of reliable accounting software leading to the inability to produce basic
− Audited Accounts
financial reports;
− From as early as November 2012, the Company's former auditor, WHK
– Lack of contract enforcement with caterers; and
Cameron's Audit Services, raised concerns in the audited reports that the
– Poor restaurant reviews leading to decline of patronage. Company may not be able to continue as a going concern due to the
Company's inability to discharge its debts.
Administrators' comments − In September 2014 HQB Chartered Accountants issued their opinion that
The Administrators concur with the reasons expressed by the Directors regarding the Company was a "going concern" based on improved trading results for
the reasons for the Company's failure and it is evident that the Company has the Club, a continuation of such a trend, and receipt of c.$245,000
operated under serious financial stress for a number of years. insurance payout proceeds which were received on 30 September 2014.
However deteriorating performance ultimately lead to the Directors
Highlighted opposite are the key indicators leading to this opinion, and more
resolving that the Company was insolvent in April 2015.
detail can be found in Section 5 where the issue of insolvent trading is addressed.
Further investigation into the reasons for the failure of the Company will be
undertaken should the Company be placed into liquidation.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 16Company's History and Reasons for Failure
Historical financials
Historical Profit and Loss – FY12 to YTD FY15 Expenses includes costs associated with daily trading including employee costs,
FY12 FY13 FY14 YTD15 depreciation and amortisation, professional fees, advertising, insurance, repairs
$ $ $ $ and maintenance and, borrowing costs.
Sales Revenue 1,733,936 2,577,177 2,629,794 2,263,896 "Other Income" includes interest received, merchandise, nominations, insurance
Cost of Sales (370,371) (707,383) (727,577) (679,709)
recoveries, sundry income, and grant income. The significant increase in "Other
Gross Profit 1,363,565 1,869,794 1,902,217 1,584,187
Income" for YTD15 is primarily due to the $245,000 insurance pay-out received
Gross Margin (%) 79% 73% 72% 70%
Other Income 114,467 163,308 133,222 271,037 in September 2014.
Total Expenses (2,016,556) (2,618,158) (2,255,573) (1,966,494) Excluding "Other Income", the Company has incurred ongoing losses from
Net Profit / (loss) before tax (538,524) (585,056) (220,134) (111,270) operations since FY12 of c. $2.2m – this is reflective of the fact that any
Source of information restructuring efforts made by previous management were ineffective to generate
net income from operations.
The Company's historical financial performance is summarised in the above table.
Including "Other Income", the Company has recorded losses for each of the
Pre-FY14
previous three financial years, and YTD15, totalling c. $1.5 m.
− The financial performance for FY12, FY13 and FY14 is based on financial
reports compiled by HQB Chartered Accountants.
YTD15
− The financial performance for the period 1 July 2014 to 21 April 2015 is based
on management accounts. These have been prepared based on information
provided from Clubline, the Company's previous accounting software, and
MYOB, the Company's current accounting software.
Overview
Since FY13 the Club has generated sales revenue from the bar, restaurant,
functions and gaming in excess of c. $2.0m p.a. and achieved a gross margin of c.
70%; and
The increase in revenue from FY12 to FY13 reflects the fact that the restaurant
started to be operated by the Club as opposed to being sub-leased out, i.e. as
opposed to merely generating lease income in FY12, in FY13 the full trading
income of the restaurant was recorded – there was also a corresponding increase
in expenses.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 17Company's History and Reasons for Failure
Historical financials
Historical Balance Sheet - as at 30 June 2012 to 21 April 2015
Balance Sheet Overview
as at June 2012 as at June 2013 as at June 2014 as at 21 April 2015
Assets
$ $ $ $
Current Assets Cash and cash equivalents as at 21 April 2015 as detailed opposite is overstated
Cash and cash equivalents 115,500 98,941 130,436 174,762 and does not accurately reflect the amount available to the Administrators at
Receivables 12,726 3,226 70 18,353 appointment.
Inventories 14,662 19,075 13,964 13,964
Other current assets 5,127 1,776 2,416 3,859
Cash and cash equivalents at date of appointment was c.$100,000, inclusive of
Total Current Assets 148,015 123,018 146,876 210,938 $19,556 in cash on hand, $40,000 term deposit and $17,110 in various cash
Non Current Assets accounts with the NAB, and $23,719 held in bank accounts with the BCU.
Property, plant and equipment 2,653,769 2,407,917 2,220,968 2,230,545 The Administrators have realised $43,274 of cash and cash equivalents. The NAB
Intangible assets 749,673 749,673 599,739 599,739
however has frozen the Company's bank accounts and applied a right of set-off
Total Non Current Assets 3,403,442 3,157,590 2,820,707 2,830,284
Less Suspense - - - (22,534)
to the term deposit, and is reviewing its right of set-off for the other accounts.
Total Assets 3,551,457 3,280,608 2,967,583 3,018,688 Receivables relate to monies payable in connection with functions held at the
Current Liabilities Club and sponsorship. To date the Administrators have realised $8,285.
Trade and other payables 235,998 341,747 345,253 477,403
Inventory includes beverages and perishable stock on hand. The majority of this
Financial Liabilities 2,648,708 2,770,815 2,761,952 2,699,225
Short-Term Provisions 169,002 183,001 157,992 172,649 being subject to the suppliers security interest registered on the PPSR. Whilst it
Other Accruals 30,000 - 20,353 20,353 appears unusual that the inventory as at 30 June 2014 and 21 April 2015 is the
Total Current Liabilities 3,083,708 3,295,563 3,285,550 3,369,630 same amount, this is as per the Company's books and records.
Non Current Liabilities
Property, plant and equipment is the written down value of the leasehold
Financial Liabilities 60,006 120,188 61,310 5,936
Total Non Current Liabilities 60,006 120,188 61,310 5,936
property, various furniture fit-outs, and a motor vehicle.
Total Liabilities 3,143,714 3,415,751 3,346,860 3,375,566 Intangible assets comprise 36 poker machine entitlements. The decrease between
Net Assets / (Liabilities) 407,743 (135,143) (379,277) (356,879) 30 June 2013 and 30 June 2014 is due to the sale of nine poker machine
Equity entitlements to the Riverina Australian Football Club Limited.
Retained Profits 407,743 (159,143) (379,277) (379,277)
Asset Revaluation Reserve - 24,000 - -
Current Year Earnings - - - 69,908
Historical Balancing - - - (47,509)
Total Equity 407,743 (135,143) (379,277) (356,879)
Sources: 1. Audited Financial Reports, 2. Company Management Accounts
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 18Company's History and Reasons for Failure Historical financials Liabilities Trade and other payables relate to amounts owing to trade creditors. A review of the aged payables as at April 21 2015 indicates c. 55% of these payables were outstanding for in excess of 30 days which we understand were the typical payment terms for the suppliers. Current financial liabilities include a number of loans provided to the Company by current and former directors, including the $40,000 put in to a term deposit with the NAB in May 2012, as well as the outstanding loan facilities with the secured creditor. Short term provisions include provisions for employee leave. It is our understanding this may not include the full amount claimed by the former Manager of c. $90,000 and as such may be understated. Non Current financial liabilities refer to the balance facilities with the NAB. The decrease in this amount is due to the repayment of the facilities from the sale of nine poker machine entitlements to the Riverina Australian Football Club Limited. © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 19
Company's History and Reasons for Failure
Directors' Report as to Affairs
Report as to Affairs – Summary Director's Report as to Affairs ("RATA")
Coffs Harbour Deep Sea Fishing Club Ltd Pursuant to Section 438B(2) of the Act, the directors of a company are required
to provide a statement about the company's business property, affairs and
Estimated financial circumstances, also known as the RATA. The RATA is a snapshot in
Realisable
time as at the date of our appointment of the assets and liabilities of the
Description Notes Valuation ($) Value ($)
company, disclosing book values and the estimated realisable value ("ERV") for
Assets not specifically charged
the assets.
Interest in land 1 1,900,000 -
Sundry debtors 2 19,577 19,577 On 21 April 2015 a written request was issued to each Director to complete the
Cash on hand 3 Unknown Unknown RATA for the Company.
Cash at bank 4 192,177 192,177
Individual RATA's were completed by each Director and these were received by
Stock 5 Unknown Unknown
Plant and equipment 6 179,000 135,000
15 May 2015. We note that RATA's received by the Directors were completed
Other assets 7 600,000 600,000 based on the same information available and result in the same information being
Net assets not subject to specific charge 2,890,754 946,754 reported.
A summary of the RATA's received is detailed in the table opposite.
Assets subject to specific charges 8 10,000 25,000
Less amount owing 8 (8,000) (8,000) You will note there are a number of differences between the RATA and the
Total Assets 2,892,754 963,754 financial position per the management accounts as at 21 April 2015. We
comment on each asset and liability in greater detail on the following pages of
Less: Amounts owing for employee entitlements 9 Unknown Unknown this report.
Less: Amounts owing and secured by debenture or floating charge 10 (2,612,000) (2,612,000)
Less: Amounts owing to preferential creditors 11 (72,698) (72,698)
Surplus / (Deficit) before the claims of unsecured creditors 208,056 (1,720,944)
Less: Amount owing to unsecured creditors 12 (203,750) (203,750)
Surplus / (Deficit) before realisation and administration costs 13 4,306 (1,924,694)
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 20Company's History and Reasons for Failure
Directors' Report as to Affairs
RATA – Commentary
Note Assets Commentary
1 Interest in Land Interest in land includes the leasehold property at cost less depreciation. Pursuant to the terms of the Crown lease, the leasehold improvements revert
to the Crown at the expiration of the lease which occurs on 30 June 2021.
2 Sundry Debtors Sundry debtors of $19,577 comprise amounts owing from 17 parties in connection with functions and sponsorship .To date debtor collections total
$8,285. The Administrators are reviewing outstanding amounts to determine whether the balance is fully recoverable.
3 Cash on hand Whilst the Directors were not aware of the amount of cash on hand at the date of appointment, cash on hand including petty cash, floats etc. totalled
$19,555.
4 Cash at bank Cash at bank at the date of appointment totalled $80,828. Of this amount, $40,000 has been withheld by the NAB as a right of set-off pursuant to their
charge over the Company's assets. The NAB is reviewing its right of set-off in relation to the remaining accounts with a balance of $17,110. The
amounts withheld by the NAB will not be available to be distributed to the Company's priority and unsecured creditors. The Administrators also took
control of six accounts held by the Company with the Banana Credit Union with a balance of $23,718.
5 Stock Whilst the Directors were not aware of the amount of stock on hand, a stock-take undertaken shortly after the appointment by the Administrators was
undertaken which indicated stock on hand was c. $14,000. The majority of this stock is subject to the respective suppliers security interest as per their
registration on the PPSR and where appropriate has been returned to the suppliers.
6 Plant and Plant and equipment includes fixtures and fittings, IT equipment and fit-out costs. The Administrators are in the process of commissioning an external
equipment valuation to assess its value.
7 Other Assets Other Assets comprise 36 poker machine entitlements (licenses). Whilst the Directors have indicated the ERV of these licences is $600,000, the ERV of
these licences will become better known once a valuation is prepared.
8 Assets subject to These assets include poker machines (as opposed to poker machine licences) and a motor vehicle (which we understand were all financed through the
specific charges NAB). The Administrators are in the process of selling the motor vehicle. A decision with respect to the poker machines will be made once the future of
the Company is determined.
9 Employee Whilst the Directors were not able to estimate the amounts owing to employees, based on information provided by the Company estimated employee
entitlements entitlements at the date of appointment including unpaid wages, leave, pay in lieu of notice, and redundancy is c. $614,000. The Secured Creditor
funded the outstanding wages during the week prior to the appointment which assisted the Administrator trade the business subsequent to the
appointment.
10 Amounts secured At the date of appointment the NAB was owed c.$2.7 million – this was secured pursuant to its circulating and non-circulating charge registered on the
by debenture PPSR.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 21Company's History and Reasons for Failure
Directors' Report as to Affairs
RATA – Commentary
Note Assets Commentary
11 Amounts owing Whilst the Directors have indicated the ATO was a preferential creditor for the amount of $72,698 (relating to unpaid PAYG and BAS), this amount is in
to preferential fact an unsecured creditor.
creditors
12 Unsecured The Director's RATA indicates that there are 76 unsecured creditors of the Company with a combined amount owing to them of $230,000. Including the
Creditors amount owing to the ATO, the total amount owing to unsecured creditors per the Directors at the date of appointment is c. $300,000.
Should creditors elect to place the Company into liquidation, the liquidator will seek formal proofs of debt from all creditors.
13 Surplus / The Directors RATA indicates that at the date of appointment the estimated deficiency based on ERV of assets is c. $1.9 m before administration costs
Deficient before and expenses.
realisation and
administration
costs
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 22Section 4 Actions undertaken to date 01. Executive summary 02. Introduction 03. Company's History and Reasons for Failure 04. Actions undertaken to date 05. Offences, voidable transactions and insolvent trading 06. Estimated return to creditors 07. Employees and Employee Entitlements 08. Administrator's recommendation 09. Remuneration 10. Meeting © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015
Actions undertaken to date
Actions undertaken to date
Key actions undertaken during the appointment Other actions
All creditors and employees were notified of the Joint and Several Administrators Other actions undertaken by the Administrators since their appointment include:
appointment, and were advised of the Administrators' intention to continue − Attended to all statutory lodgements;
trading the business in the short term whilst an urgent assessment was undertaken
into the Company's ongoing viability. − Addressed all employee queries concerning their entitlements and the
Administration process;
After careful consideration the Administrators made the decision to cease trading
on 27 April 2015 to ensure no further trading losses would be incurred. − Liaised with the NAB regarding payment of employee wages;
The first meeting of the Company's creditors was held on Friday, 1 May 2015. − Liaised with the Directors and in relation to their statutory duties;
The Administrators have undertaken an urgent expression of interest campaign − Attended to creditor and supplier enquiries including retention of title claims;
seeking interest from parties to explore an amalgamation and/or sale of assets. An − Collected outstanding debtors;
advertisement was published with ClubsNSW on 5 May 2015. Further detail − Liaised with the ATO and the Office of State Revenue;
regarding the Administrators EOI campaign is provided on page 26 of this report.
− Liaised with lessors and essential services providers;
The Administrators have been liaising with the Directors and the Company's
− Liaised with the ILGA, OLGR and Council;
external accountants in order to obtain the books and records of the Company.
− Liaised with the Company’s accountant and the Administrators' legal
The Administrators have undertaken a review of the reasons behind the
representatives concerning ongoing matters in connection with the
Company’s failure and undertaken preliminary investigations.
administration; and
− Attend to an orderly shutdown of the Company's operations.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 24Trading during the Administration
Trading during the Administration
Trade during the Administration and rationale for ceasing to trade The summary below excludes any remuneration incurred by the Administrators
The appointment of the Administrators was made on the evening of 21 April in connection with trading the business to 27 April 2015, disbursements such as
2015. The first effective day of trade during the administration was 22 April 2015. valuation and insurance costs, and wages funded by the NAB for pre-
appointment wages.
On 22 April 2015 the Administrators undertook an urgent assessment of the
ability to trade while an urgent EOI campaign was commenced for the Club and Estimated trading position as at 18 May 2015
its assets.
The Secured Creditor funded the immediate payment of the c.$18,000 wages and ($)
on costs to enable the Club to continue trading. Trading Receipts
However, after careful consideration the Administrators decided to cease trading Bar 8,758
Catering 9,083
on 27 April 2015 to ensure no further trading losses were incurred. This decision
Gaming 10,640
was based on unfavourable weekly forecasts prepared with the assistance of key Other 244
management. Total Trading Receipts 28,725
As a result of this decision, all employees were terminated on 27 April 2015. A Trading Expenses
number of key staff were retained on a contract basis to assist with the orderly Wages and salaries (6,593)
Direct purchases (3,528)
shutdown, collating information required to assist with the sale of the business,
Gaming payouts (9,019)
debtor recoveries, PPSR and third party asset claims, gathering employee data Utilities (1,200)
required to calculate entitlements and provision of various information required Sub-contractors (7,474)
by the Administrators. Other/General contingency (2,343)
Total Trading Expenses (30,159)
Net Trading Position (1,434)
Trading performance
Detailed opposite is a summary of the sales and estimated trading expenses
incurred by the Administrators during their appointment. It is estimated the
Company traded at a marginal loss of $1,434 during the administration.
Sales revenue received during the trade-on period totalled $28,725 which related
to daily takings from the bar, restaurant and gaming facilities.
Expenses primarily comprise employee related costs, food and beverage supplies,
gaming pay-outs, contractors and utilities. Some of the expenses are
approximations only as a number of invoices are yet to be received for services
rendered.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 25Actions undertaken to date
Sale of the business
Overview The EOI campaign was conducted in a compressed timeframe to ensure any
The Administrators commenced an urgent expression of interest campaign offers received could be considered prior to the convening of the second meeting
shortly after their appointment. On 23 April 2015 the Administrators contacted of creditors.
ClubsNSW to arrange for an advertisement to be placed in their publication. An The EOI campaign has received strong interest in the Club and its assets,
advertisement was sent to ClubsNSW to be published on 28 April 2015, however including the leasehold property. To date we have liaised with a total of 20
it was not published until 5 May 2015. parties.
The advertisement published with ClubsNSW sought expressions of interest Of the interest received, four parties have indicated they are interested in
from registered clubs with a view to exploring an amalgamation and/or sale of continuing operations at the existing premises and are therefore interested in the
assets. leasehold property as part of their offer. Three parties are private entities, and the
In addition to the advertisement with ClubsNSW, the Administrators circulated a remaining party is a club interested in exploring an amalgamation.
one page expression of interest flyer to a number of potential interested parties As at the date of this report, the Administrators have not accepted an offer and
identified through Grant Thornton's network of contacts in the pubs and clubs are continuing to liaise with these parties whilst their offers are assessed.
sector.
In addition to the EOI campaign, there is a group of individuals within the Coffs
Stage
The proposed amalgamation/sale of assets timetable
Date is summarised below: Harbour community who are seeking to save the Club through community
supported efforts. Many of these individuals are members of the Club. A public
1. Advertisement placed with ClubsNSW 5 May 2015
information meeting is scheduled to be held on Monday, 18 May 2015 at 6.00pm
2. Interested parties executed confidentiality deed On request at the Club's premises to discuss such a plan. It is hoped that such a plan may
and receive information pack result in a DOCA proposal being put to the Administrators.
3. Non-binding expression of interest offers to be 12 May 2015
received
4. Review of expression of interest offers 13 May 2015 – 21 May 2015
received
5. Preferred party advised 22 May 2015
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 26Section 5 Offences, voidable transactions and insolvent trading 01. Executive summary 02. Introduction 03. Company's History and Reasons for Failure 04. Actions undertaken to date 05. Offences, voidable transactions and insolvent trading 06. Estimated return to creditors 07. Employees and Employee Entitlements 08. Administrator's recommendation 09. Remuneration 10. Meeting © 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015
Offences, voidable transactions and insolvent trading
Investigations overview – summary of key findings
Insolvent Trading • Based on our review of the books and records and analysis of the financial position of the Company, it is the Administrators'
view that the Company was insolvent from at least December 2014 based on the cash deficiency and its inability to pay
Refer to page 37 to 41 creditors. Should the Company be placed into liquidation, further analysis will be undertaken prior to this period in
connection with ascertaining the point of insolvency.
Books and Records • In accordance with Section 286 of the Act, we have not identified any material deficiencies in the books and records provided.
However based on our preliminary investigations to date it would appear that the Company had inadequate financial reporting
procedures and system in place, in particular the ability to produce regular financial reports for management in a timely manner.
Unfair Preferences • During our investigations we have identified some unfair preference payments to third party creditors. However we do not
anticipate this will result in a material return to unsecured creditors.
Refer to page 32
• The recovery of any unfair preferences would be limited to the period of insolvency.
Uncommercial transactions • Based on our investigations, we have not identified any uncommercial transactions to third parties or related parties that would
result in a material recovery for the benefit of creditors.
Refer to page 33
Directors transactions • We have undertaken preliminary investigations into a number of potential director related transactions. Based on these
investigations, the Administrators are of the view that these transactions do not constitute unreasonable director related
Refer to page 33 transactions. Should a liquidator be appointed, the reasonableness of these transactions will be investigated further.
• We have not identified anything to indicate the Directors intentionally avoided the payment of employee entitlements.
Breaches of director duties • Our brief investigations undertaken during the administration period have not identified any material breaches of director duties.
However, should the Company be placed into liquidation, the liquidators will review any potential breaches of directors' duties
Refer to page 36 further.
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 28Offences, voidable transactions and insolvent trading
Investigations Overview
Antecedent transactions recoverable by a Liquidator The prospect of recovery of any antecedent transactions will depend on two key
In accordance with Regulation 5.3.A.02, the administrator of a company, in issues:
setting out his or her opinions in a statement mentioned in paragraph 439A (4)(b) − Availability of funding to allow the cost of further investigation and litigation
of the Act, must specify whether there are any transactions that appear to the to be met. At this stage, we have no funds available to pursue such actions. As
administrator to be voidable transactions in respect of which money, property or such, any actions would need to be funded by an external third party. A cost
other benefits may be recoverable by a liquidator under Part 5.7B of the Act. benefit analysis would be conducted prior to instigation of actions as well as
The administration process set down in Part 5.3A of the Act, provides a very consultation with the creditors and/or a Committee of Inspection; and
short time within which to conduct investigations into potential recoveries from − The ability of the party (potential defendant) to be able to meet and pay any
voidable transactions. At this stage, due to the short time frame allowed, it is successful judgement against it in favour of the liquidators. A cost benefit
difficult to definitively identify the likely courses of actions and/or recoveries that analysis will need to be conducted on each case to determine if there is merit
may be available to a liquidator. Such conclusions would usually be made after and a net recovery to creditors in pursuing any action.
more detailed investigations have been undertaken. Such investigations may
− It is our understanding that whilst the Company had pre-appointment
include:
director and officer insurance in place it is unlikely it will cover any claims
− A detailed review of documentation produced by relevant parties upon brought against the Directors in light of the policy being terminated due to
enquiry by a liquidator/Administrator; and the Company's insolvency.
− The public examination under oath, of relevant parties regarding the
transactions concerned.
Accordingly, whilst we have conducted the necessary enquiries required of an
Administrator, the conclusions drawn herein with respect to our investigations
into the Company's affairs should be viewed as preliminary and may be
confirmed, or otherwise, by way of other sources of investigation should any of
the Company proceed to liquidation.
The transactions generally fall into two categories, being insolvent trading and
voidable transactions (comprising unfair preferences, uncommercial transactions
and unfair loans).
© 2015 Grant Thornton | Coffs Harbour Deep Sea Fishing Club Limited (Administrators Appointed) | 18 May 2015 29You can also read
